Mr Amit has a salary income & F & O’s Income? Tax audit under Section44AB is applicable to Mr Amit as his transaction limit of F & O’s exceeds 1 crore. How will be his turnover computed in relation to F & O’s Income?

In normal business turnover is based on sales and thus reaching the limit takes time.
But in F&O it reached easily as each lot is valued high, Limit is reached easily. Therefore computation method need be different. Thus for computing turnover limit Following things should be added:

  1. Profits from the trade
  2. Loss from the trade
  3. Premium received from sale of Options
  4. In case of Reverse Trade, difference should also be added

This can be explained by way of illustration. Below are four Components:

  1. Profits from the trade – Rs 1,00,000
  2. Loss from the trade – Rs 1,50,000
  3. Premium received from sale of Options – Rs 50,000
  4. In case of Reverse Trade, difference – Rs 75,000

Thus for the purpose of Tax Audit u/s 44AB, turnover will be calculated as : 1,00,000+1,50,000+50,000+75,000 = Rs.3,75,000/-.

Leave a Reply

Your email address will not be published.